Non-Consolidated Annual Report 2014

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED

NON-CONSOLIDATED ANNUAL REPORT 2014

BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED

Notes to the Non-consolidated Financial Statements

For the year ended March 31, 2014

(Expressed in Barbados dollars)

Accounting Policies...(continued)

Financial instruments

The Credit Union initially recognises loans and advances, deposits and loans payable on the

date that they are originated. All other financial assets and liabilities are initially recognised on

the trade date, i.e., the date that the Credit Union becomes a party to the contractual provisions

of the instrument.

The classification of financial instruments at initial recognition depends on the purpose and

management’s intention for which the financial instruments were acquired and their

characteristics. All financial instruments are measured initially at cost being their fair value plus

transaction costs that are directly attributable to its acquisition or issue.

Financial assets

The Credit Union derecognises a financial asset when the contractual rights to the cash flows

from the asset expire, or it transfers the rights to receive the contractual cash flows in a

transaction in which substantially all the risks and rewards of ownership of the financial asset are

transferred. Any interest in such transferred financial assets that is created or retained by the

Credit Union is recognised as a separate asset or liability.

The Credit Union classifies its financial assets in the following categories: held to maturity,

available-for-sale and loans and receivables.

Held to maturity financial investments

Held to maturity financial investments are non-derivative financial assets with fixed or

determinable payments and fixed maturities, which the Credit Union has the positive intention

and ability to hold to maturity.

After initial measurement, held to maturity financial investments are subsequently measured at

amortised cost using the effective interest rate method (EIR), less any impairment losses.

Amortised cost is calculated by taking into account any discount or premium on acquisition and

fees that are an integral part of the EIR. The Credit Union has reported government securities

which have all been classified under the held to maturity classification.

Impairment losses are reported as a deduction from the carrying value of the investment

(through an allowance account) or investment balance. The amount recorded for impairment is

the cumulative loss measured as the difference between the amortised cost and the current fair

value, less any impairment loss on that investment previously recognised in the statement of

income.

If the Credit Union were to sell or reclassify more than an insignificant amount of held to maturity

investments before maturity (other than in certain specific circumstances), the entire category

would be tainted and would have to be reclassified as available-for-sale. Furthermore, the Credit

Union would be prohibited from classifying any financial asset as held to maturity for the current

and during the following two financial years.